ACTIVITY BASED COSTING Definition

Bookmark and Share

ACTIVITY BASED COSTING (ABC) is a costing system that identifies the various activities performed in a firm and uses multiple cost drivers (non-volume as well as the volume based cost drivers) to assign overhead costs (or indirect costs) to products. ABC recognizes the causal relationship of cost drivers with activities.

Learn new Accounting Terms

CONSUMPTION SMOOTHING is aimed at protecting consumption patterns from the impact of shocks, and can take effect either before or after their occurrence. Post-shock responses include modifying consumption, raising income by mobilizing labor or selling assets, drawing on informal or formal sources of savings, or activating claims on informal insurance mechanisms.

ORDINARY ASSET is a non-capital asset used for business purposes. See CAPITAL ASSET.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.